Applicants and respondents in unfair dismissal matters often experience emotional attachment to their case. A desire for ‘justice’ often drives parties to act out their emotions throughout proceedings, particularly in negotiations. Parties will feel they have either been unfairly treated (the employee) or unfairly accused (employer).
“It’s a matter of principal!” is a phrase often uttered by someone who rejects an offer from the opposing side. Unfortunately, taking this position can prove to be a costly decision.
S116 (1) of the Fair Work Act 2009 (Cth) (the Act) provides that parties to proceedings before the Fair Work Commission (the Commission) are to bear their own costs; however, the Commission may, in certain circumstances, award costs against a party.
In recent cases, the Commission has relied on its powers under s400A of the Act, to award costs against parties who unreasonably reject written offers to settle.
In Colin Ferry v GHS Regional WA Pty Ltd t/a GHS Solutions  FWC 3120 the parties had participated in various conciliation conferences and the respondent had made a written offer to the applicant of $3,000 to discontinue the proceedings. The offer specified it was made on a “without prejudice bases save for costs”.
The Commission rejected the respondent’s argument that negotiations in the conciliation conferences should be taken into account as such negotiations were carried out on a ‘without prejudice’ basis; however, the Commission found that in rejecting the written offer to settle:
‘The applicant did not reasonably assess the prospects of his case and his refusal to accept the respondent settlement offer went beyond “hard bargaining” and did amount to an unreasonable act in connection with the continuation of his application which caused costs to be incurred by the respondent.”
Accordingly, costs were awarded against the applicant in the proceedings.
When participating in negotiations, parties are reminded that:
- Negotiations during the conciliation conference are confidential and any offers made in the conference are made on a ‘without prejudice’ basis;
- Parties are free to bargain vigorously and reasonably refuse the opposing party’s offers;
- Each party should assess the strength of their case and act reasonably in considering any offer to settle, particularly offers made on an ‘open basis’;
- A party, who is deemed to have acted unreasonably in the course of the proceedings, could have a cost order awarded against them.
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 Colin Ferry v GHS Regional WA Pty Ltd t/a GHS Solutions  FWC 3120 at 60-63.
 Colin Ferry v GHS Regional WA Pty Ltd t/a GHS Solutions  FWC 3120 at 71.